Why Should Employers Be Concerned About Employee Credit Card Balances?
Employees' financial stress is rising as their debts grow and their savings shrink. They need help.
Here comes summer! Consumers are trying to make up for lost time during the pandemic by driving long distances or boarding planes for vacation. According to a survey done by Forbes Advisor, “49% of consumers plan to travel more in 2023 than in 2022.”¹ Unfortunately, there is something going on in their checkbooks and savings accounts that too many consumers are ignoring. Inflation has made everything we buy more expensive, but to combat rising prices, the Federal Reserve has been increasing interest rates. As a result, costs associated with debt have risen dramatically. Just as consumers are getting ready to use their credit cards for their vacations, the interest rates on unpaid balances have soared. (According to WalletHub.com, the average interest rate on all credit card accounts went from 14.56% in February of 2022 to 20.09% in February of 2023.²)
Depending on which source you read, consumers have either surpassed $1 trillion in credit card debt or are about to. According to WalletHub, “Consumers added an all-time record $179.4 billion in new credit card debt to their tab during 2022, capped off by an $84.9 billion increase during the fourth quarter alone.”³ Once employees return from their vacations and check the mail, they may also find federal student loan payments due for the first time in over three years.
What could their increasing debt lead to?
Something has to give. Employees would be well served to take a close look at their finances and reconsider how they are spending versus saving their income. According to TransUnion, consumers have tapped into excess savings in order to deal with rising prices. When looking at personal savings as a percentage of disposable income, this topped 25% at one point during the pandemic, but in the 4th quarter of 2022, it dropped to 2.7%.⁴ Too many statistics are pointing to consumers facing a future of rising financial stress as a high percentage of their monthly income starts to go toward debt payments rather than saving for future goals.
Why does it matter for employers?
Do you know how financially stressed your employees are? Employers that act now to help their employees should be rewarded with a more productive and loyal workforce. The first step is to proactively provide and promote resources that employees are comfortable using. Most people feel embarrassed when they realize the financial challenges they are facing, and they hesitate to get help. Resources need to be confidential, fit within an employee’s schedule, and be unbiased. MSA has been providing employees with personalized financial well-being services for over 35 years. Let us apply everything we have learned from past recessions, interest rate cycles, and over 1.3 million consultations to help your employees. On average, employees reduce debt by $4,928 and increase their financial well-being by 90% when working with a Money Coach.⁵
To learn more about how you can partner with MSA to empower employees to take charge of their financial futures, visit mysecureadvantage.com/why-msa.
My Secure Advantage, Inc. or any of its representatives do not endorse any of the websites or company names listed here.
¹ Pokora, Becky. “[Survey] 49% Of Consumers Plan To Travel More In 2023.” Forbes, 9 Jun. 2023. Web. Accessed 22 Jun. 2023. https://www.forbes.com/advisor/credit-cards/inflation-has-not-deflated-americas-travel-plans-2023/
² McCann, Adam. “Historical Credit Card Interest Rates.” WalletHub, 24 May 2023. Web. Accessed 23 Jun. 2023. https://wallethub.com/edu/cc/historical-credit-card-interest-rates/25577
³ Comoreanu, Alina. “Credit Card Debt Study.” WalletHub, 7 Jun. 2023. Web. Accessed 22 Jun. 2023. https://wallethub.com/edu/cc/credit-card-debt-study/24400
⁴ “Amidst Stubbornly High Inflation, Consumers Continue to Turn to Credit Cards, Home Equity to Maintain Stability.” TransUnion, 1 Feb. 2023. Web. Accessed 22 Jun. 2023. https://newsroom.transunion.com/q4-2022-ciir/
⁵ My Secure Advantage, Inc., January 2023. Based on MSA member self-reported data, when member is working with a coach on this specific issue, from 1/1/21 – 12/31/22.
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